What is the impact of the debt repayment on the company's leverage ratios and future financing flexibility?

Leverage ratios – immediate effect

The $‑3.8 million share‑buy‑back was funded out‑of‑pocket, but the press release also notes a “debt‑repayment transaction.” By using cash on hand to retire a portion of its borrowings, Rimini Street will cut its total interest‑bearing liabilities. Assuming the debt reduction is material relative to the $150 M‑plus balance‑sheet (the company’s most recent 10‑Q listed a net debt of roughly $140 M), a $5–10 M repayment would trim the debt‑to‑EBITDA ratio by roughly 0.2–0.4 points and lower the net‑debt‑to‑Equity ratio by a similar magnitude. The net result is a cleaner capital structure: a modest but measurable improvement in leverage that reduces the risk of a “high‑‑leverage” rating downgrade and brings the firm a step closer to the sub‑2× leverage range that many growth‑tech peers target.

Financing flexibility – forward‑looking impact

Lower leverage frees up headroom for future external financing on more favourable terms. With a reduced current debt load, lenders can price any next credit facility on a better risk‑adjusted basis (e.g., a lower base rate or a higher covenant buffer). Moreover, the improved capital‑structure profile can be emphasized in investor calls and roadshows, signaling that the company is not over‑leveraged and can still pursue organic growth initiatives—or opportunistic M&A—without straining credit capacity. However, the cash outflow to retire debt also shrinks the company’s short‑term liquidity cushion. Analysts should monitor the remaining cash‑and‑cash‑equivalents versus scheduled operating cash‑flow to ensure that the debt repayment does not leave the firm cash‑constrained during a working‑capital‑intensive quarter.

Trading implication

In practice, the leverage‑clean‑up is likely to be received positively by the market: a lower debt‑to‑EBITDA and net‑debt/Equity convey reduced financial risk, which can tighten the discount to comparable high‑growth peers. The stock could see upward pressure, especially if the repayment is large enough to push leverage into the 1.5–2.0 × range—a sweet spot for many growth‑tech investors. From a tactical standpoint, a short‑to‑medium‑term buy‑on‑dip (if the price slides on the cash‑outflow) is justified, with a target at the next resistance band around $12‑$13 (based on the 4‑week higher‑high/higher‑low uptrend). Conversely, if the repayment is modest and liquidity looks tight, a tight‑‑‑stop‑loss just below the current 20‑day moving average (~$10.8) would protect against any short‑run cash‑flow concerns.